Financial success depends a lot on the financial boundaries you set for yourself. Financial boundaries are guidelines you establish regarding your finances that limits how much you spend not only on yourself but others.

Boundaries for yourself are about your spending habits, differentiating between wants and needs for example. If you have a clear set of rules for yourself, it can prevent you from wasting money on unnecessary expenses.

Financial boundaries you set with others makes it easier when you find yourself in a situation where you must make a financial decision that involves someone else, for example being asked for financial help by a family member or friend or feeling pressured to spend in ways that don’t align with your principles.

Without boundaries you may feel stressed when situations arise that require you to make a financial decision.

Boundary examples

Don’t take on new debt

Put your financial needs before others

Be clear about shared expenses in relationships

Don’t feel obligated to give a gift you cannot afford or that does not align with your financial plan

Don’t feel pressured to attend events that require spending money

Don’t overspend on unnecessary items

Define your financial goals

Goals and boundaries are not the same thing, goals are something you want to achieve. Consider what boundaries you will need to set to achieve your goals. Some examples of financial goals are paying off your mortgage and auto loans, paying off credit card debt and student loans, creating an emergency fund, or preparing for long-term care later in life. Once you have clear goals setting financial boundaries will help you achieve them.

Have a financial plan

Be intentional with your spending. Create a budget that includes all your monthly expenses and stick to it. Prioritize your spending by paying all your necessary expenses before anything else, including monthly bills, rent or mortgage payments, auto loan payments, saving and retirement and any other bills you have. You can also include unnecessary expenses like dining out, helping a friend and entertainment in your budget imposing a limit on those expenses as well.

Prioritize savings & your emergency fund

Money set aside for savings and an emergency fund should not be an option, both should be included in your necessary expenses. Setup an automatic transfer so that each time you get paid a designated amount is transferred to these accounts. Paying yourself first should be a priority.

Communicate your boundaries

When you have clear boundaries, you will be prepared to respond when you are in a situation where others ask for money. If the person has a close enough relationship with you to ask for financial support, they should understand and respect your boundaries. If they react in a negative way, it might be a sign that the relationship is not as valuable as you thought it was. You should not feel like you need to explain your financial situation to anyone but having a few simple responses in mind when asked for money will prepare you for when this happens.

Identify financial relationships

It’s ok to provide financial assistance to a friend or family member who finds themselves in a financial crisis but if you become the person they turn to each time they need money you may be in an unhealthy financial relationship with that person. Learn to identify these types of people and understand it’s ok to say no.

Hold yourself accountable

Sticking to a budget and setting limits on yourself may not always be easy but it is important for your financial success and security. Once you have rules in place it helps you to be more mindful when making financial choices.

Talk about finances early

If you are moving in with someone or getting married talk about money management beforehand so that you are on the same page financially.

Manage emotional spending

Emotional spending can be money we feel pressured to spend. It could be saying no to an event with a friend or family member due to the cost or saying no to yourself when something you want to buy does not fit into your budget. Learn to identify emotional spending so you recognize it when it happens and are better able to control it.

Automate your finances

One way to stay within your financial boundaries is by automating your finances. Set up automatic transfers for savings, investments and bills so that those expenses are met without giving it a lot of thought.